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UK Pension Income (Decumulation) Consumer Research Report 2020

  • ID: 5010945
  • Report
  • March 2020
  • Region: United Kingdom
  • 61 Pages
  • IRN Research

This report is a consumer research report looking at how individuals generate income from their pensions. This covers the decumulation phase of the pension process. i.e. using the pension to generate income.

This report studies the income generation process from the points of view of two types of consumers:

  • Pensioners: i.e. individuals who are currently receiving income from a pension. How did they act when they generated income? Interviews with 294 individuals were conducted.
  • Pension Savers: i.e. individuals aged 50+ who currently are saving into a pension and will be taking income over the next decade or so. How do they think they will act in the near future when they come to generate income from the pensions they own? Interviews with 371 individuals were conducted.

For this report, the publisher commissioned research from MIS Group’s UK panel. The research was structured so that 2,077 nationally representative consumers aged 18+ were asked about their pension ownership, pension income and their actions.

Partial retirement will become a more important feature of the pension market in the future than it is today. 28% of individuals who are currently receiving income from a pension (i.e. Pensioners) generate some of their income from working, even if part-time, while 44% of consumers aged 50+ who currently are saving into a pension and will be accessing their pensions over the next decade (i.e. Pension Savers) say they are planning to generate income from working, if only part-time, after they access their pensions. The rise of partial retirement will, in turn, see a rise in the percentage of individuals deciding to convert only some of their pension(s) into cash/income: 51% of Pension Savers aiming for partial retirement (67% if don’t know responses are excluded) say they will convert only some of their pension(s) into income/cash when they partially retire.

Other key findings from this report include:

  • Workplace pensions are now and will be in the future the prime source of pension income
  • Pension freedoms have and will further radically change the pension landscape
  • Consumers need professional help before they access their pensions and they show a willingness to consult with professionals before deciding what to do
  • Professional help should guide rather than advise
  • Innovative, online solutions can help widen professional help
Note: Product cover images may vary from those shown

Executive Summary

  • Introduction
  • Almost One-Third of Consumers have or will Decumulate Relatively Soon
  • Workplace Pensions the Prime Generators of Pension Income…
  • But Final/Career Average Pensions become Less Important…
  • As will Full Retirement
  • Meaning Work, along with Property, will become a more Important Income Source
  • Pension Freedoms Radically Change the Pension Landscape
  • Consumers need Professional help when they Access their Pensions
  • Professional help should Guide rather than Advise …
  • With Consumers Willing to Consult Professionals when they Decumulate...
  • Especially if they have DC Pensions
  • Online Solutions can help Widen Professional help


Pension Savers VS Pensioners

  • Almost One-Third of Consumers are Covered in the Report
  • As Expected, Pensioners are Older than Pension Savers
  • Pension Savers are more London-Centric Compared with Pensioners

Pensions Past and Present

  • Workplace Pensions Dominate the Pension Saver and Pensioner Landscapes
  • Final Salary Schemes Declining in Use
  • One-In-Five Pension Savers have Decumulated

Retirement Plans and Actions: Then and Now

  • Compared with Pensioners, Pension Savers are Less Likely to Fully Retire
  • The Pension is just One Option on the Menu
  • Affluent Pensioners have more Options
  • Multiple Income Sources may Explain Why Retirement could be Comfortable for Some
  • Guaranteed Income or Personal Control
  • Pensioners and Pension Savers Aim to Minimise Tax
  • Not All Pension Savings will go into Income Generation…

Seeking Advice

  • Professional Advice and Guidance are Important because Pension Knowledge is Patchy
  • Older and Affluent Pension Savers have the most Knowledge
  • Pension Savers want to be Guided rather than Advised
  • And they are Willing to Seek help when they Decumulate…
  • And the Good News is that when Pensioners Accessed their Pensions, they also got Professional help
  • Pensioners Generally find it Easy to Decide, but DC Pensions are more Problematic
  • DC Pensions, Where Decisions can go Wrong
  • But Defined Benefit Pension Holders also need to Take Care
  • Help is needed in the Early Stages

Ways to Improve Knowledge and Decision Making

  • Consumers show Interest in Online Advice
  • Hybrid Human/Machine Guidance Services the Most in Demand

List of Figures

Figure 1 Breakdown of Consumers By Type
Figure 2 The Gender, Age, Income and Social Grade Profiles of Pensioners and Pension Savers
Figure 3 The Regional Profiles of Pensioners and Pension Savers
Figure 4 The Breakdown of Pension Ownership
Figure 5 The Types of Private and Workplace Pensions Owned
Figure 6 How Pension Savers have Acted to Access Cash in their Pensions
Figure 7 The Retirement Plans of Pension Savers VS Actual Retirement Actions of Pensioners
Figure 8 The Non-Pension Income Sources in Retirement
Figure 9 The Non-Pension Sources of Income in Retirement By Key Demographics
Figure 10 Pension Saver Confidence and Pensioner Financial Comfort
Figure 11 The Actions Taken to Gain Access to Income From Pensions
Figure 12 How Those Using Annuities or Income Drawdown to Access their Pensions Took the 25% Tax-Free
Figure 13 How Pension Savers may Use the Money they Withdraw From their Pensions
Figure 14 What Aspects of their Future Pension Options Do Pension Saver Understand Well
Figure 15 Pension Saver Knowledge of How to Act when Taking Income From their Pensions
Figure 16 The Potential for Advice and Guidance Services Among Pension Savers
Figure 17 The Professional help Used Before Taking Cash or An Income From a Pension
Figure 18 The Professional help Used By Pensioners when Managing Pensions
Figure 19 How Easy Was it for Pensioners to Decide What to Do with their Pension
Figure 20 Where Pension Savers Think they will Invest their Income Drawdown Funds
Figure 21 Are Pensioners Planning to Meet with An Advisor /Use An Advice Service in the Next Few Years?
Figure 22 Pension Holder Support for Online Pension Selection and Management Tools
Figure 23 The Willingness to Use Automated Online Service By Preference for Guidance or Advice

Note: Product cover images may vary from those shown